Converted HTML entity on opening of FCKEditor

In the WYSIWYG mode, I typed "Please do not use <h1> tags in this area". When I go to source mode, everything looks fine and shows "<p>Please do not use &lt;h1&gt; tags in this area</p>". I save and update in the DB. The page shows the text properly and in the code the HTML entities are there.

However, when I open the page back in edit mode.. it converts the arrow entities back to an actual <h1> tag and then messes up the code to show as
"<p>Please do not use </p>
<h1>tags in this area
<p>&nbsp;</p>
</h1>"

I am using the FCKConfig.FormatSource = true; and getting the content from a convert with oFCKeditor.ReplaceTextarea();

Is it the ReplaceTextarea() function that is messing this up? I want to open the page and still keep the HTML entity intact and display as a visual tag, not underlying HTML tag in the code.

Thanks.. I am going through all the config options, just not sure which one needs to be off/on.